6. Opening of a branch

6.3. Calculation of Spanish corporate income tax

Below is a simple example of how Spanish corporate income tax and nonresident income tax is calculated on the profit obtained by a Spanish subsidiary or by the branch in Spain of a foreign company, respectively. (For further information, on these taxes, see section 2.1. of Chapter 3).

Parent company in

	UE country ₍₁₎	Treaty country	Non-treaty country
Subsidiary:
Profit of Spanish subsidiary	100	100	100
Spanish income tax (25%) ₍₂₎	25	25	25
Dividends	75	75	75
Withholding tax on dividends	_₍₄₎	7.5₍₅₎	14.25₍₃₎
Total tax in Spain	25	32.5	39.25
Branch:
Profit of Spanish branch	100	100	100
Spanish income tax (25%) (2)	25	25	25
Profit remitted to the parent company	75	75	75
Withholding tax	_₍₄₎	_₍₆₎	14.25₍₃₎
Total tax in Spain	25	25	39.25
_{(1) Spain has tax treaties in force with all EU countries except Denmark.} _{(2) The general corporate income tax rate is 25%.} _{(3) Withholding tax rate = 19%.} _{(4) Exempt, provided certain conditions are met.} _{(5)The withholding tax rate on dividends used.} _{(6) The branch profit tax will apply if provided for in the corresponding tax treaty (e.g. the U.S., Canada and Brazil).}